How is a Home’s Value Determined?

March 30, 2019

When considering getting a home equity loan, the first thing to do is to determine how much equity your home has. Determining one’s equity is quite easy, as you just need to know how much you owe on your mortgage and what the current market value of your house is.

But how does one determine the value of their home? This can be tricky, as there are many variables that go into knowing that value.

Why a Home’s Value is Important to Know

It’s important to always be aware of the value of your home. Having this information will allow you to know:

  • How to price your home
  • How to calculate your home’s equity
  • If your house’s listing price is accurate

While knowing these values is great for giving you more control of their processes, the benefits don’t stop there. If you are ever looking to refinance a mortgage or get a home equity loan, knowing your home’s value will be important.

Understanding Market Values

To understand what your home is valued at, you must first understand what a market value is. A market value is how much your house would traditionally sell for. This means that a house is being sold because a person is moving, not because of death or foreclosure.

Essentially, the market value is a guess as to what your house could be worth. That guess is determined by a number of aspects such as:

  • Location
  • Interior features
  • Exterior features
  • The surrounding homes

Each of these features adds and subtracts to your house’s market value, especially the homes in your area. If the homes that surround yours are vacant or lavish will greatly determine how your home is valued.

The Different Ways to Determine the Value of Your Home

Now that you know why the value of your home is important, and what factors go into that evaluation, let’s discuss the different ways you can determine the value of your home. There are several methods in which to value your home, all of which have their own unique benefits.

Hire an Appraiser

If you are ever curious about the value of your home, then you can hire an appraiser to estimate its value at any time. An appraiser’s job is to provide a value for something. So, if you want, they can provide you with your homes current value based on the criteria we already mentioned.

Or they can provide you with an evaluation of what your home was worth in the past. By seeing what your home was previously worth, you can see how much your home has grown or depreciated since you’ve owned it.

Ask a Real Estate Agent

While hiring an appraiser can give you a detailed evaluation of your home, they can also be quite expensive. If you wish to avoid an appraiser’s high costs, then using a real estate agent may be the way to go. A real estate agent would perform their own market analysis of your house, though it won’t be as detailed as an appraiser’s.

But a real estate agent’s evaluation will determine your home’s value, as well as the current market value of the surrounding properties. If you use a real estate agent to value your home, then they may do it at little or no cost, but they may do so in hopes you hire them.

Use Online Tools

Sometimes doing things on our own is the best way to go about things. This kind of thinking is why online lenders and real estate sites offer evaluation tools to help if you want to perform an evaluation on your own. By using public records of property deeds, property transfers, and tax assessments of houses in your area, you can try to determine your home’s value.

But while these tools are easily accessible and convenient, they are not 100% accurate. So the evaluation is a rough estimate, at best, using limited resources. To get the best evaluation possible, it’s best to use a real estate agent or professional appraiser.

Compare Houses in Your Neighborhood

If you know of a house similar to yours in your area that is up for sale, then finding that listing online may help. By looking at what a similar house in your neighborhood is trying to sell for, you can get an estimate of what your home may be valued at—albeit it will be a rough estimate.

MaxCash has years of financial experience—after all we’ve been helping people acquire funding for two decades! We provide free financial guidance to potential borrowers looking for an affordable loan from a reputable lender. Avoid doing all the research yourself! Hire us to do all the work for you.

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